BUENOS AIRES, May 14 (Reuters) - The International Monetary Fund said on Monday a target exchange rate for the peso will not be a condition of a financing deal with Argentina, as the currency closed more than 6 percent weaker at a record low of 25 per U.S. dollar.

Argentina requested a “high access stand-by arrangement” from the IMF last week after the peso depreciated rapidly, prompting the central bank to sell reserves and hike interest rates to 40 percent in a bid to contain one of the world’s highest inflation rates and stop the peso’s slide.

The bank sold $408 million in reserves on Monday as part of its effort to shore up the peso. During all of last week, the currency weakened 6.30 percent, and for the first 11 days of May it weakened 12.03 percent.

The Merval stock index rose 2.16 percent on Monday.

In a statement, an IMF spokesman said the Fund had not discussed any specific target for the exchange rate with Argentine authorities during negotiations in Washington.

“Argentina has a floating, market-determined exchange rate, and we fully support that,” the spokesman said. “The exchange rate should continue to be determined by market forces, with the central bank continuing to use all the policy tools that are at its disposal.”

The IMF negotiations carry political risks for President Mauricio Macri. Many Argentines blame IMF-backed policies of the late 1990s for the country’s 2001-2002 economic meltdown. Some opposition politicians and activists have voiced concerns that the deal being drawn up in Washington will require painful fiscal belt tightening.

Opposition politicians have even demanded any deal with the IMF pass through Congress but Federico Pinedo, the leader of Macri’s party in the Senate, said that would not be necessary.

“It is expressly stated in the Argentine laws that this is a negotiation that corresponds to the president,” Pinedo told Reuters in an interview.

In an earlier statement, the IMF said its board would discuss Argentina at an informal meeting scheduled for Friday. The Fund said that meeting was “part of our usual process of briefing the board on negotiations for high access IMF programs.”

LOWER GROWTH, HIGHER INFLATION

High interest rates will have a negative impact on activity, and the weaker peso resulting from a floating exchange rate regime will add to already sky-high inflation, but both are necessary to prevent a deeper crisis, Treasury Minister Nicolas Dujovne said.

“We will have somewhat less growth, and somewhat more inflation,” Dujovne told reporters on Monday. “It is obvious that will happen.”

The central bank said 617 billion pesos ($24.680 billion) of central bank notes known as Lebacs would mature on Tuesday. That is less than the 670 billion pesos worth that traders had expected. Because of the peso’s volatility, the bank decided to buy back some of the assets.

Interest rates on the notes have been rising in secondary markets, as the bank is widely expected to hike rates in Tuesday’s auction to entice traders to roll over their maturing notes.

“The possibility of a complete renewal of the maturing (Lebacs) is not expected,” consultancy Portfolio Personal said in a note, adding that in the four auctions so far this year, 14 percent of maturing Lebacs had not been renewed.

Argentina has also received proposals for $3 billion worth of repurchase deals from banks in recent weeks, Finance Minister Luis Caputo told reporters. In recent months, the country has inked $2 billion in such deals with Credit Suisse and HSBC.

Unions marched through the city center on Monday to protest the IMF deal and Macri’s increases in utilities prices, part of his effort to reduce the fiscal deficit.

In a statement, Macri’s office said he had spoken by phone with U.S. President Donald Trump on Monday morning, and that Trump had said he supported Macri’s discussions with the IMF. The United States has the most voting power of any IMF member country, with 16.5 percent of the votes. (Reporting by Walter Bianchi, Jorge Otaola, Hugh Bronstein and Gabriel Burin; writing by Luc Cohen and Caroline Stauffer; editing by Jonathan Oatis and Tom Brown)